Pascrell, Reed Bill Reintroduce Long-Term Unemployed Hiring Tax Credit Legislation; Bipartisan legislation would extend Work Opportunity Tax Credit to incentivize hiring of workers that have exhausted their unemployment benefits
U.S. Reps. Bill Pascrell, Jr. (D-NJ) and Tom Reed (R-NY), both members of the House Ways and Means Committee, today announced the reintroduction of H.R.481, the Long-term Unemployed Hiring Incentive Act, legislation that would extend the successful Work Opportunity Tax Credit program to make companies that hire long-term unemployed individuals eligible for a tax credit of up to $2400. Similar legislation was introduced in the last Congress, and the legislation was approved by the Senate Finance Committee in S. 2260, the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act.
"Although we have seen a dramatic decrease in the unemployment rate in our country, there are too many folks that continue to slip through the cracks, especially in New Jersey, which has the second worst long-term unemployment rate in the country," said Pascrell. "Far too many Americans continue to be out of work despite months and years of searching, and even more have dropped out of the labor force entirely. Congress can help break the stigma suffered by so many of the long-term unemployed by offering employers incentives to get these folks back to work. This bipartisan bill advanced in the Senate in the last Congress and I look forward to working with my Ways and Means colleagues to ensure that this important investment in our nation's workforce is a part of any tax reform or tax extenders legislation in the 114th Congress."
“I am pleased to see this bipartisan legislation reintroduced in the 114th Congress and I thank Congressman Pascrell for his work on this,” said Rep. Reed. “I care about the long-term unemployed, and this is a step toward getting them back into the work force. We need to break the cycle of long-term unemployment.”
While the unemployment rate fell to 5.6% in December, 2014, the long-term unemployment rate continues to remain elevated, with nearly one third of all unemployed individuals out of work for more than 27 weeks, the highest ratio on record. The long-term unemployment rate of 1.8% is nearly the highest level ever recorded.
The Long-Term Unemployed Hiring Incentive Act extends the Work Opportunity Tax Credit (WOTC) program to cover qualified long-term unemployed individuals. WOTC provides businesses who hire certain qualified individuals a general business tax credit equal to 40% of the first $6000 of their first years’ salary, meaning the maximum credit a business can claim per employee is $2400. The bill defines "long-term unemployed" as an individual who has exhausted their regular unemployment compensation (the first 26 weeks of unemployment benefits, or slightly over six months) since the economic crisis began in 2007.
A recent Brookings Institute study also found that only 11% of Americans who are long-term unemployed find steady, full-time work a year later according to data from 2008 to 2012, with only 39% finding work at all during that year.
The Federal Reserve Bank of Boston recently published research showing that job applications from those out of work for more than six months receive far fewer call backs from prospective employers. In fact, the study found that those out of work for six months or longer received fewer call backs for a job in the same industry they were previously employed than someone with no experience in that industry but who had only been out of work for a short period of time.